Depth of field is the range in front of and behind the focus point that still reads as sharp. Open the aperture wider — a smaller f-number like f/1.4 — and that range narrows, so foreground and background blur fast; stop it down to a bigger f-number like f/16 and a much wider range stays crisp.
The hexagon icon in the demo mimics the aperture blades opening and closing — the wider it opens, the smaller the f-number and the stronger the background blur. On the web you don't need real lens optics: filter: blur() on separate background and foreground layers gets you most of the same impression.
At the same focal length, a bigger sensor (or film) and a closer subject both shrink depth of field further. That's why phone "portrait mode" fakes it in software — the optics alone can't get shallow enough, so the background gets blurred artificially after the fact.
When to use
Use it to clear a busy background behind a product or portrait — or fake the same emphasis in a UI card by blurring everything except the one element you want noticed.